TD BANK GROUND LEASE 1190 Northeast 163rd Street North Miami Beach, FL 33162 - Offering Memorandum
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Offering Memorandum
TD BANK GROUND LEASE
1190 Northeast 163rd Street • North Miami Beach, FL 33162
NON-ENDORSEMENT AND DISCLAIMER NOTICE
Confidentiality and Disclaimer
The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap Real
Estate Investment Services of Florida, Inc. ("Marcus & Millichap") and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This
Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.
The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation,
with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements,
the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the
financial condition or business prospects of any tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing
Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has
Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information
provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate
Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.
Non-Endorsement Notice
Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or
name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product,
service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.
PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
TD BANK
North Miami Beach, FL
ACT ID ZAA0390039
2
NET LEASED DISCLAIMER
Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows:
The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will
not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee,
warranty or representation whatsoever about the accuracy or completeness of any information provided.
As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before
completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus &
Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer.
Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance
of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors.
Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to
your satisfaction with the suitability of the property for your needs.
Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal
and financial documents related to the property and tenant. While the tenant’s past performance at this or other locations is an important consideration, it is not
a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based
on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any
guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in
whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting
his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a
replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential
replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property.
By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost,
expense, or liability arising out of your investigation and/or purchase of this net leased property.
3
TD BANK
TABLE OF CONTENTS
SECTION
FINANCIAL ANALYSIS 01
Executive Summary
Property Summary
Pricing Matrix
INVESTMENT OVERVIEW 02
Offering Summary
Regional Map
Local Map
Aerial Photo
MARKET OVERVIEW 03
Market Analysis
Demographic Analysis
4
TD BANK
FINANCIAL
ANALYSIS
5
TD BANK
OFFERINGSUMMARY
OFFERING SUMMARY
EXECUTIVE SUMMARY
OFFERING SUMMARY
Price $6,750,000
MAJOR EMPLOYERS
Net Operating Income $308,000
Capitalization Rate – Current 4.56%
Price / SF $1,443.54 # OF EMPLOYEES
EMPLOYER
*
Rent / SF $65.87 Baker Norton US Inc 2,000
Lease Type Ground Lease Lanier-James Education Center 1,448
Gross Leasable Area 4,676 SF Barry University Inc 1,218
Year Built / Renovated 2012
St Marys Properties 1,152
Lot Size 0.96 acre(s)
Aventura Hospital and Med Ctr 1,100
APN 07-2217-029-0010
Walmart 950
FINANCING Police Department 895
Down Payment $2,970,000 Mercedes Bens of Miami 866
Net Cash Flow 4.13% / $122,780 County of Miami-Dade 861
Cash on Cash Return 4.13% National Stores Inc 782
Total Return 4.13% / $122,780 Coca-Cola 716
Shopping Center MGT Corp 715
DEMOGRAPHICS
1-Miles 3-Miles 5-Miles
2017 Estimate Pop 29,729 211,904 483,552
2010 Census Pop 27,325 193,352 442,528
2017 Estimate HH 8,758 74,420 172,897
2010 Census HH 8,290 68,690 159,945
Median HH Income $36,913 $40,288 $42,035
Per Capita Income $14,981 $21,246 $23,773
Average HH Income $50,711 $59,932 $66,076
* # of Employees based on 5 mile radius
#
6
TD BANK
PROPERTY SUMMARY OFFERINGSUMMARY
OFFERING SUMMARY
THE OFFERING RENT SCHEDULE
Property TD Bank
YEAR ANNUAL RENT MONTHLY RENT RENT/SF CAP RATE
Property Address 1190 NE 163rd Street
North Miami Beach, FL 33180 Current $308,000 $25,667 $65.87 4.56%
Price $6,750,000
Year 11 - 15 $338,800 $28,233 $72.46 5.02%
Capitalization Rate 4.56%
Price/SF $1,443.54 Year 16 - 20 $372,680 $31,057 $79.70 5.52%
Year 21 - 25 $409,948 $34,162 $87.67 6.07%
PROPERTY DESCRIPTION
Year Built / Renovated 2012
Gross Leasable Area 4,676 SF
Zoning B-2
Type of Ownership Fee Simple
Lot Size 0.96 Acres
LEASE SUMMARY
Property Subtype Net Leased Bank
Tenant TD Bank
Rent Increases 10% each Five Year Period
Guarantor Corporate Guarantee
Lease Type Ground Lease
Roof & Structure Tenant Responsibility
Lease Effective August 18,2011
Lease Commencement October 13, 2012
Lease Expiration October 31, 2037
Lease Term 25
Term Remaining on Lease
18.8
(Years)
Renewal Options Four Five-year Options
Landlord Responsibility Zero
Tenant Responsibility Yes
NOTES
- Lease Year : The period commencing on the Rent Commencement Date and expiring on the last day of the month in which the first (1st) anniversary of the Rent Commencement Date occurs, and each successful twelve (12)
month period thereafter which falls within the initial Term or a Renewal Period.
- Lease Expiration : Last day of the Twenty Fifth (25th) Lease Year.
#
7
TD BANK
PROPERTY SUMMARY OFFERINGSUMMARY
OFFERING SUMMARY
LEASE SUMMARY
Lease Year 1 – 5: $280,000
Lease Year 6-10: $308,000 Tenant: TD Bank
Annual Fixed Rent Rate: Lease Year 11-15: $333,800
Lease Year 16-20: $372,680 Guarantor: Corporate Guarantee
Lease Year 21-25: $409,948
Credit Rating: S&P : AA-
Rent Commencement: October 13, 2012
The Fair Market Value (“FMRV”) for each renewal period shall be
the fair rental value of premises comparable to the Demised
Initial Lease Term 25 Years
Premises in the neighborhood. Landlord and tenant agree that
FMRV shall be determined by landlord in its sole discretion. In no
Renewal Period Rate: Lease Year 6 - 10 $308,000
event shall the Fixed rent for any Renewal period be less than the
Fixed Rent for the immediately preceding prior five (5) year period, Lease Year 11 - 15 $338,800
nor greater than 110% of the Fixed Rent for the immediately Lease Year 16 - 20 $372,680
preceding prior five (5) year period. Options:
Lease Year 21 - 25 $409,948
Tenant shall pay all charges, expenses, costs, and outlays of every
Repairs and Maintenance
nature and kind relating to the premises and the lease
Lease Type: Ground Lease
Taxes Tenant Pays all taxes n
$65.87/SF
Tenant pays all insurance costs and names landlord as an Base Rent: $5.49/SF/Month
Insurance
additional insured $308,000 Annual Rent
Utilities Tenant pays all utilities
Yes – Tenant has ten (10) days following the receipt of ROFR to Rent Increases: 10% each Five Year Period
Right of First Refusal
notify if Tenant will elect to purchase
Estoppel Yes – Tenant shall provide an estoppel with ten (10) days of written
n request
NOTES
#
8
TD BANK
PRICING MATRIX OFFERINGSUMMARY
OFFERING SUMMARY
Initial
CAP Rate Price Price/SF ANNUALIZED OPERATING INFORMATION
Cash-on-Cash
4.56% $6,750,000 $1,443.54 4.13% INCOME
Net Operating Income $308,000
Operating Information
NOI as of 2019 $308,000 RENT SCHEDULE
Rent/SF $65.87 MONTHLY
YEAR ANNUAL RENT RENT/SF CAP RATE
Gross Leasable Area 4,676 SF RENT
Current $308,000 $25,667 $65.87 4.56%
Year 11 - 15 $338,800 $28,233 $72.46 5.02%
Financing
Year 16 - 20 $372,680 $31,057 $79.70 5.52%
New Acquisition Financing $3,780,000
Year 21 - 25 $409,948 $34,162 $87.67 6.07%
Loan To Value 56.00%
Interest Rate (Interest Only) 4.90%
Term 10 Years
Annual Debt Service Payment $185,220
Year 1 Debt Service Coverage 1.66
Year 1 Net Cash Flow After Debt Service $122,780
NOTES
#
9
TD BANK
ACQUISITION FINANCING
MARCUS & MILLICHAP CAPITAL CORPORATION WHY MMCC?
CAPABILITIES Optimum financing solutions
to enhance value
MMCC—our fully integrated, dedicated financing arm—is committed to
providing superior capital market expertise, precisely managed execution, and
unparalleled access to capital sources providing the most competitive rates and Our ability to enhance
terms. buyer pool by expanding
finance options
We leverage our prominent capital market relationships with commercial banks,
life insurance companies, CMBS, private and public debt/equity funds, Fannie
Mae, Freddie Mac and HUD to provide our clients with the greatest range of Our ability to enhance
financing options. seller control
• Through buyer
Our dedicated, knowledgeable experts understand the challenges of financing
qualification support
and work tirelessly to resolve all potential issues to the benefit of our clients.
• Our ability to manage buyers
finance expectations
• Ability to monitor and
manage buyer/lender
progress, insuring timely,
predictable closings
• By relying on a world class
Closed 1,707 National platform $5.63 billion Access to
set of debt/equity sources
debt and equity operating total national more capital
financings within the firm’s volume in 2017 sources than and presenting a tightly
in 2017 brokerage any other firm underwritten credit file
offices in the industry
10TD BANK
INVESTMENT
OVERVIEW
11TD BANK
INVESTMENT OVERVIEW OFFERING SUMMARY
Marcus & Millichap is proud to present for sale the fee interest in a TD Bank ground lease, located in the heart of North Miami Beach, Florida. The subject property is
located on a unique corner lot with direct frontage on 163rd Street and Northeast 12th Avenue, which offer high traffic counts of over 54,000 Vehicles Per Day (VPD) and
7,500 VPD, respectively. This property is situated on a signalized intersection across Bank of America and Chase Bank on a .96-acre lot of land and offers approximately
4,676 square feet of rentable area. TD Bank is located across the street from The Mall at 163rd Street which anchors The home Depot, Marshalls, Ross, and Wal-Mart
Supercenter. Strategically located in between I-95 and Biscayne Blvd, the subject property experiences high traffic counts from both East and West directions and is easily
accessible for foot traffic created by the Mall.
Built in 2012, the property has been exceptionally maintained and provides professional curb appeal, high signage opportunity, and ample parking. This TD Bank includes a
four-lane drive-through with approximately 30 parking spaces, providing for a healthy parking ratio of 6.42: 1,000 square feet of rentable space. The four-lane drive-through
facilitates business flow as North Miami Beach is a densely populated area with robust demographics including a population of 29,000 in just a 1-mile radius from the
property and a population of 483,500 in a 5-mile radius with 8% population growth since 2010.
TD Banks signed a 25-year ground lease with approximately 18.8 years remaining and includes four five-year options and 10% rent increases every five years. This new
construction NNN ground lease is secured by the 8th largest commercial bank in the U.S according to the Federal Reserve with an investment grade credit tenant of AA- by
the S&P. This location has an excess of $82,089,000 in deposits. This asset requires zero landlord responsibilities and given its location, convenience, and condition of the
property, this asset offers an investor to own a stress-free property with solid return.
Plenty of high-rise buildings and mixed-use projects have been surging in the North Miami Beach area due to the new zoning code on and around Biscayne Boulevard,
which allows for higher density projects. There are numerous condo and presale units in the planning and presale phase of development on and around the stretch of
Northeast 151st Street and Northeast 176th Street. North Miami Beach has seven elementary schools, two middle schools, and three high schools. The attractive zoning,
strong demographics, and rapid increase in redevelopment provides an investor the opportunity to purchase a stable asset in a growing local economy.
TD Bank services more than 9 million customers, with over 26,000 employees in 1,300 convenient locations throughout the Northeast, Mid-Atlantic, Metric D.C, the
Carolinas and Florida.
INVESTMENT HIGHLIGHTS
▪ Investment Grade Credit Tenant with an AA- Rating by S&P
▪ Absolute Triple Net TD Bank Ground Lease with 18.8 Years Remaining
▪ Strong Rental Increases and Renewal Options
▪ Zero Landlord Responsibility
▪ Corner Lot located directly on 163rd Street and Northeast 12th Avenue, Which
Combined Have High Traffic Counts of Over 61,500 VPD
12TD BANK
TENANT PROFILES
America’s Most Convenient Bank ©
TD Bank 2018 Annual Report
ABOUT TD BANK Total Assets $1.3 Trillion
TD Bank, America's Most Convenient Bank is one of the 10 largest banks in
Total Deposits $0.9 Trillion
the U.S, with approximately 26,000 employees and deep roots in the
community dating back more than 150 years. The Banks offers a broad Total Loans $666 Billion
array of retail, small business, and commercial banking products and
Commercial $2.6 Billion
services to more than 9 million customers through its extensive network of
approximately 1,300 convenient locations throughout the Northeast, Mid- Personal $952 Million
Atlantic, Metro D.C, the Carolinas and Florida. Retail Stores ~ 1,300
In Addition to banking products, TD Bank and its subsidiaries offer ATM’s ~ 3,394
customize private banking and wealth management services through TD Customers 9 Million
Wealth and vehicle financing and dealer commercial services through TD
Auto Finance. Employees ~ 26,000
TD Bank is a member of TD Bank Group and a subsidiary of the Toronto-
Dominion Bank of Toronto, Canada, a top 10 financial services company in Named Money magazine’s "Best Big Bank” in America
North America. The Toronto-Dominion Bank trades on the New York and 2016
Toronto stock exchange under the ticker symbol TD.
TD Bank was named one of Fortune's Best Workplaces in Financial Services
& Insurance and one of the magazine's 40 Best Companies in Financial
Moody’s S&P Fitch
Services (2016)
Outlook Stable Stable Stable TD Bank, America’s Most Convenient Bank®, has the highest ranking in
Florida for overall customer satisfaction in Retail Banking, according to
Long-Term Issuer Rating Aa3 AA- AA- the 2016 J.D. Power U.S. Retail Ranking Study SM
Short-term issuer rating P-1 A-1+ F1+
TD Bank ranked in the top 5 bank sites, according to the 2016 Temkin Web
The Toronto-Dominion Bank Aa1 AA- AA-
Experience Ratings. Based on a study of 10,000 U.S. consumers, the Temkin
ratings ask consumers how satisfied they are with their most recent web
interaction
12
13TD BANK
TENANT PROFILES
General Information
Tenant Name TD Bank
FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth Website www.tdbank.com
quarter a year ago: Parent Company Toronto - Dominion Bank
• Reported diluted earnings per share were $1.58, compared with $1.42. Headquartered Toronto, ON, Canada
• Adjusted diluted earning per share were $1.63, compared with $1.36. Rentable Square Feet 4,676 SF
• Reported net income was $2,960 million, compared with $2,712 million.
Percentage of RBA 100.00%
• Adjusted net income was $3,048 million, compared with $2,603 million.
Lease Commencement 10/13/2012
FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:
Lease Expiration 10/31/2037
• Reported diluted earnings per share were $6.01,compared with $5.50.
• Adjusted diluted earning per share were $6.47,compared with $5.54. No. of Locations ~ 1,300
• Reported net income was $11,334 million, compared with $10,517 million.
• Adjusted net income was $12,183 million, compared with $10,587 million.
TORONTO, Nov. 29, 2018 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the fourth quarter ended October 31, 2018. Fourth
quarter reported earnings were $3 billion, up 9% on a reported basis and up 17% on an adjusted basis, compared with the same quarter last year.
"I am extremely pleased with our earnings performance in the fourth quarter, which capped a very strong year," said Bharat Masrani, Group President and Chief
Executive Officer, TD Bank Group. "2018 represented a year of tremendous progress as we advanced key strategic priorities and continued to innovate to
strengthen our competitive advantage."
U.S Retail Conclusion
U.S. Retail reported net income was $1,114 million (US$855 million) and adjusted net income "We enter 2019 from a position of strength. While there are a number of macro-
was $1,139 million (US$874 million), an increase of 44% (38% in U.S. dollars) on a reported basis economic and geopolitical unknowns in the year ahead, the progress we made
and 40% (34% in U.S. dollars) on an adjusted basis, compared with the same quarter last year. in 2018 gives me confidence in our future success. Our over 85,000 TD
The U.S. Retail Bank, which excludes the Bank's investment in TD Ameritrade, reported net colleagues around the globe have delivered outstanding outcomes for our
income of $886 million (US$680 million), up 32% (26% in U.S. dollars) on a reported basis and customers and our shareholders and I thank them for their passion and
up 29% (23% in U.S. dollars) on an adjusted basis, from the same period last year. The U.S. commitment in 2018," concluded Masrani. The foregoing contains forward-
Retail Bank continued to invest in enhancing its capabilities, products, and services, while looking statements. Please refer to the "Caution Regarding Forward-Looking
achieving peer-leading growth in loan and deposit volumes. Earnings also reflect higher Statements".
margins driven by a favorable rate environment and benefits from U.S. tax reform. TD
Ameritrade contributed $228 million (US$175 million) in reported earnings to the segment and
$253 million (US$194 million) in adjusted earnings. Wholesale Banking net income was $286
million this quarter, an increase of 24% compared with the fourth quarter last year, reflecting
higher trading-related revenue, and fee and advisory revenue, partially offset by higher For full report:
provisions for credit losses and expenses. The Wholesale Bank continues to invest in the global file:///Z:/Proposals/Office/1190%20NE%20163%20St.%20North%20Miami%20Beach,%2
0FL%20(TD%20Bank)/Due%20Dilligence/TD%20Bank%202018%20Annual%20Report.pdf
expansion of its U.S. dollar business.
12
14PROPERTY
TD BANK NAME
PRICING LOCATION
PRICING AND
AND TENANT SUMMARY
OVERVIEW
VALUATION
VALUATION MATRIX
MATRIX
1190 NE 163rd St, North Miami Beach, FL 33162
CLOSE PROXIMITY TO:
15#PROPERTY
TD BANK NAME
PRICING
PRICING LOCATION
AND TENANT
REGIONAL
AND SUMMARY
OVERVIEW
VALUATION
VALUATION MATRIX
AND LOCAL
MATRIX
MAP
1190 NE 163rd St, North Miami Beach, FL 33162
16#TD BANK
AERIAL PHOTO
17TD BANK
AERIAL PHOTO
18TD BANK
AERIAL PHOTO
19TD BANK
AERIAL PHOTO
20TD BANK
PROPERTY PHOTO
21TD BANK
PROPERTY PHOTO
22TD BANK
NATIONAL NET-LEASED RETAIL REPORT
MARKET
OVERVIEW
23TD BANK
NATIONAL NET-LEASED RETAIL REPORT
Strong Tailwinds Continue to Propel Healthy Economy;
New Tax Law May Encourage Investors to Refine Strategies Investment Highlights
Tax reform powers economic acceleration. The new tax law has invigorated Over the past year, transaction velocity eased modestly as investors
economic growth, boosting consumption and business investment. With optimism awaited details on the new tax law. With much of that uncertainty now
running high, many companies have generated new jobs, dropping the national relieved, sales activity could accelerate. Furthermore, decreased taxes on
unemployment rate below 4 percent. A tightening job market has supported pass-through entities could lead to repositioning efforts, bringing more
increased wage growth, expanding personal disposable income more than 2 assets online and elevating market liquidity.
percentage points above the 10-year average to 5.4 percent. Because of this, core
The 1031 exchange was retained in the new tax law, remaining a
retail sales have benefited, rising by an average of 5.6 percent in May and June. The
commonly used practice for single-tenant net-leased investors. Investors
convergence of these factors has resulted in accelerated economic growth that
favor this tax provision to swap out management-intensive assets for
climbed above 4 percent.
properties that involve a more passive approach while deferring the
Elevated Treasury rates placing upward pressure on yields. A booming economy capital gains tax.
brings with it inflationary risk, prompting the Federal Reserve to tighten monetary
Under the new tax law, sale-leasebacks have become an increasingly
policy. The single-tenant net-leased retail sector may be substantively impacted by a
popular tactic. With new restrictions on business interest deductibility,
more disciplined monetary approach as assets are typically responsive to the 10-
some retailers are selling the real estate in which they operate to
year Treasury due to their bondlike parallels. This will coalesce with other
investors, then leasing it back to maximize deductions. This process
components such as brand, location and lease terms when determining going-in cap
opens the door for reinvestment into existing assets and investment into
rates. For example, dollar store yields can vastly differ as a number of these assets
future plans as more capital would be available.
are in rural locations, providing potential for higher returns. Conversely, yields for
convenience stores and quick-service restaurants typically maintain a much smaller
range due to their tempered sensitivity to key determinants of cap rates.
* Forecast
** Through June
24TD BANK
NATIONAL NET-LEASED RETAIL REPORT
New Tax Law Provides Spark to Investors;
Sale-Leaseback Opportunities Could Increase
New provisions, preservation of old ones may boost investor sentiment. Changes to the tax code, as well as the
retention key provisions like tax-deferred exchanges, real estate depreciation and mortgage interest deduction should
keep investor sentiment high for single-tenant net-leased retail assets. Additionally, new pieces to the tax code should
further boost the appeal of these relatively passive investments. For example, the new 20 percent pass-through
deduction enables some active investors using an entity such as an LLC to boost after-tax yields. However, this
deduction comes with restrictions based on income and asset base but offers strong potential for those who qualify.
Additionally, bonus depreciation is a temporary provision allowing investors to increase their current cash flow by
immediately expensing personal property in real estate assets acquired after Sept. 27, 2017.
Changes to tax law could inspire owner/users to seek sale-leasebacks. The most influential change to the tax
code on the single-tenant net-leased retail sector may be new restrictions on business interest deductions. This
provision could encourage companies to utilize sale-leasebacks as they shape their real estate strategies around
lease expenses that remain fully deductible. For owner/users, selling the real estate in which they operate to investors
and then leasing it back from them could maximize profitability, as well as unlock equity for reinvestment into current
operations and funds for potential expansion plans. Also, the previous tax law allowed companies to deduct all of their
interest expenses on their taxes, but the new provisions restrict the deductibility of business interest for companies
with gross receipts in excess of $25 million. Now, interest totaling just 30 percent of earnings before taxes,
depreciation and amortization can be deducted on taxes, further incentivizing companies to pursue sale-leasebacks.
* Through July
** Forecast
25TD BANK
NATIONAL NET-LEASED RETAIL REPORT
Solid Fundamentals Aided by New Concepts
Rents benefit from thinned construction pipeline. Available space in the single-tenant net-leased sector will
contract for the ninth consecutive year, pushing national vacancy down to 4.3 percent in 2018. Even though demand
remains strong, construction will continue to taper this year, completing 36 million square feet. The percentage of
single-tenant construction is reduced for the second year in a row as developers step back construction. With limited
retail property completions, rent gains should be strong this year, advancing 4.2 percent to $21.18 per square foot.
This increase well exceeds the previous five-year average of 3.2 percent.
Retailer strategies change to match consumer needs. Convenience continues to emerge as a common theme in
the single-tenant net-leased retail sector as several types of retailers have adopted this concept to drive foot traffic
and sales. For example, drugstores have improved their product selection by including items historically purchased at
convenience stores and grocery stores. This strategy has also helped these retailers improve front-store sales and
hold a greater edge over online pharmacies. Additionally, dollar stores have added convenience to their affordable
product mix by offering instant-consumption items, such as grab-and-go sandwiches and beverage bars.
** Forecast
26TD BANK
NATIONAL NET-LEASED RETAIL REPORT
Capital Markets
Lenders Pursue Deals as Capital Plentiful;
Caution Enforcing Underwriting
Fed watchful as economic surge raises inflationary pressure. Strengthened hiring amid exceptionally low unemployment levels have boosted wage growth, placing upward
pressure on inflation. Amid this trend coupled with rising trade protectionism and tariffs, the Federal Reserve appears determined to head off inflation risk by continuing its
quarterly increases of the overnight rate. These actions are lifting short-term interest rates while the 10-year Treasury rate remain range bound near 3.0 percent. Should the 10-
year remain steadfast, Fed tightening could create an inverted yield curve in which short-term rates rise above long-term rates. Although this event has preceded every
recession of the past 50 years, many economists suggest such an inversion this year could be an exception to the rule. Because of distortions caused by regulatory changes
and quantitative easing, this inversion could be different. Nonetheless, the Fed’s stated path does raise recessionary risk levels because it could weigh on confidence levels and
restrain spending by consumers and businesses, thus slowing economic growth.
2018 Capital Markets Outlook
10-Year Treasury still “sticky” at 3 percent. After surging at the beginning of the year, the 10-year Treasury has been range bound near 3.0 percent. To create some headroom
for its escalation of short-term rates, the Fed has tried to exert upward pressure on long-term interest rates by unwinding its balance sheet. This quantitative tightening has had
little influence, particularly as foreign investors have enjoyed a yield premium relative to their native 10-year rates.
Potential rapid interest rate escalation a downside risk. Although capital remains plentiful, lending could tighten quickly for a short period if interest rates rise rapidly. As
experienced in late 2016 when the 10-year rose by more than 80 basis points in 60 days, and again at the beginning of 2018 when there was a 60-basis-point surge, market
liquidity could tighten if rates jump. Considering this has happened twice in the last two years, borrowers will likely benefit by taking a cautious approach with their lenders and
lock in financing quickly.
* Through July 20
** As of Aug. 17
27TD BANK NAME
PROPERTY
PRICING LOCATION
PRICING AND
AND TENANT SUMMARY
OVERVIEW
VALUATION
VALUATION MATRIX
DEMOGRAPHICS
MARKETINGMATRIX
TEAM
CREATED ON JANUARY 16, 2019
1 Miles 3 Miles 5 Miles
POPULATION
2022 Projection 28,880 215,493 493,115
2017 Estimate 29,729 211,904 483,552
2010 Census 27,325 193,352 442,528
2000 Census 27,849 186,059 414,979
INCOME
Average $50,711 $59,932 $66,076
Median $36,913 $40,288 $42,035
Per Capita $14,981 $21,246 $23,773
HOUSEHOLDS
2022 Projection 8,810 78,179 182,020
2017 Estimate 8,758 74,420 172,897
2010 Census 8,290 68,690 159,945
2000 Census 8,595 67,489 151,806
HOUSING
2017 $174,899 $180,996 $196,529
EMPLOYMENT
2017 Daytime
26,196 176,187 401,158
Population
2017
7.28% 6.56% 6.43%
Unemployment
2017 Median Time
33 33 32
Traveled
RACE & ETHNICITY
White 34.03% 41.67% 43.89%
Native American 0.04% 0.05% 0.05%
African American 54.50% 49.04% 48.00%
Asian/Pacific
3.80% 2.32% 1.70%
Islander
Source: © 2015 Experian
28#You can also read
